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Thread: Moller-Maersk CEO Shifts Investment Targets

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    Moller-Maersk CEO Shifts Investment Targets

    Moller-Maersk CEO Shifts Investment Targets
    Wednesday, 02 December 2009

    A.P. Moller-Maersk, parent of Maersk Line, has identified three areas outside of its core shipping interests as the priority for future investments as its shipping activities promise to drag the company into its first-ever full-year loss. Nils Smedegaard Andersen, chief executive of Denmark’s largest company, told the Financial Times that the company will target spending on its oil and gas business, its container-handling terminals and, surprisingly, on retailing.

    Andersen said the company would also consider selling distressed assets.

    Andersen, who was recruited as CEO of Moller-Maersk in 2007 from his post as chief executive of Danish brewer Carlsberg, has been mulling the changes in the investment priorities since last spring when it became apparent that the losses at Maersk Line and Maersk Tankers, its oil and gas tanker division, would plunge the company into a loss this year for the first time in the group's 105-year history.

    The inclusion of retailing – where Maersk owns 67.7 per cent of the company that runs Fotex and Netto supermarkets and a 37.7 per cent stake in two department stores – will cause surprise because the business has often been seen as a candidate for disposal.

    Margins at the container terminals have risen, while profits in container shipping have evaporated.

    Andersen called the areas “our focus area for investments,” adding, “It of course depends on what opportunities come up.”

    Maersk Line made post-tax losses of $1.54 billion in the first nine months this year after earnings per container shipped fell below operating costs.

    Andersen said Maersk Line has been conservative in ordering new container ships. The vessels it has ordered account for about 20 per cent of its existing fleet, compared with an average 40 per cent at rival lines.

    “We’ve definitely not acted unwisely in having an order book of 20 per cent, given that average volumes have been increasing by between 8 and 10 per cent over recent years,” he said.

    Andersen also predicted that losses in container shipping would shrink in 2010, despite the expected delivery of large numbers of new ships. Maersk Line's current earnings per container shipped were too low to continue, he said.

    “I believe that losses will become smaller in 2010, not because we’ll achieve a good supply-demand situation but simply because, even with a bad supply-demand situation, present rates are not sustainable,” Andersen said.

    Source: The Journal of Commerce Online

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    Site Caretaker Dave A's Avatar
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    The impact of the GFM on shipping is hardly surprising. Making a profit in that game is all about efficiencies and a drop in cargo volume just has to go straight to the bottom line.
    The trouble with opportunity is it normally comes dressed up as work.

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    Or the bottom of the ocean. Which ever is preferred.

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    Site Caretaker Dave A's Avatar
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    It's a lot tougher to scuttle your ships for the insurance claim and get away with it nowadays
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member wynn's Avatar
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    Har har har!!! don't forget the added cost of avoiding 'piracy'?
    "Nobody who has succeeded has not failed along the way"
    Arianna Huffington

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